How to incorporate company in Singapore
It is one of the famous saying that the 19th century belonged to Britain, the 20th century belonged to America, and the 21st century will be the Asian century. Most multinational companies have set up businesses in Asia. The World Bank Global Economic Ranking 2012 marked Singapore as the number one country that is most friendly to businesses.
The strengths of Singapore’s current entrepreneurial landscape are a pro-business government, a vibrant venture capitalist market, and ease of starting a business.
Why Singapore is the Best place for business set up:-
10 compelling reasons for you to set up business in Singapore:
- Easiest place to do business:-
Singapore has the most conductive environment to do business in the Asia Pacific and the World.
- Second most competitive city in the world:-
Singapore maintains a sharp competitive edge among all the world economies.
- Business-centric immigration laws for expatriates:-
Singapore’s strategic geographic position makes it an ideal choice for foreign talent.
- One of the best Country to work in Asia:-
Singapore is the best place to not only work, but also to play and live in all of Asia.
- One of the best Intellectual Property (IP) Protection:-
In Singapore’s knowledge-based economy, intellectual property is treated as an invaluable asset and is subject to the most protection in Asia and Second most in the world.
- City with the best investment potential:-
Singapore has been named the investment destination of the World.
- Most transparent Country in Asia:-
The Government of Singapore adopts an honest and transparent approach when handling business issues.
- Free funds repatriation:-
Many other Asian economies have myriad rules and regulations designed to prevent repatriation of funds out of their country. In Singapore, all exchange controls were removed in 1978. As a result, all residents, non-residents, corporate, and individuals can transfer their funds in and out of the country whenever they want. The government has set no limit on moving investment capital to and from the country, nor any limits on profit repatriation outside.
9. Taxes and other compliance:-
Singapore has a low rate of corporate tax, indirect tax, as well as personal tax. So, the country has become the best place to optimize taxes in the Asia Pacific region. It is possible to set up a company here in quick time, while direct and indirect taxes as well as corporate taxes are simplified to ease business. As a result, your company’s compliance cost will come down drastically
10. Least Bureaucratic Asian Nation:-
There is no worry of bureaucratic red tape delay of business operations in Singapore.
Salient Features of Formation of Company at “Singapore”:-
- No Criteria of Authorised Share Capital.
- 100% Foreign Shareholding Allowed.
- Single Shareholder can hold entire shareholding.
- No Dividend Tax.
- Every Company Needs Company Secretary (Singapore Resident).
- Minimum Paid Up capital is S$1 only.
- No Stamp Duty.
- Minimum Tax Liability after prescribed Limits.
- Only One Board Meeting required to be held in a Year.
Singapore Effective Corporate Tax Rates(for Private Limited Companies)
| Individual Shareholding
(Owned by An Individual or a Group of Individuals) |
100% Corporate Shareholding
(Subsidiary Company or Branch Office) |
Corporate + Individual Shareholding
(At least 1 Individual holding 10% of Shares) |
|||
| Taxable Income (SGD) | Effective Tax Rate
(in %) |
Taxable Income (SGD) | Effective Tax Rate
(in %) |
Taxable Income (SGD) | Effective Tax Rate
(in %) |
| 100,000 | 0.00** | 100,000 | 5.65 | 100,000 | 0.00** |
| 200,000 | 2.97 | 200,000 | 5.80 | 200,000 | 2.97 |
| 300,000 | 3.97 | 300,000 | 5.85 | 300,000 | 3.97 |
| 400,000 | 5.95 | 400,000 | 7.36 | 400,000 | 5.95 |
| 500,000 | 7.14 | 500,000 | 8.27 | 500,000 | 7.14 |
| 1,000,000 | 11.60 | 1,000,000 | 12.41 | 1,000,000 | 11.60 |
| 2,000,000 | 14.30 | 2,000,000 | 14.70 | 2,000,000 | 14.30 |
| 3,000,000 | 15.20 | 3,000,000 | 15.47 | 3,000,000 | 15.20 |
| 5,000,000 | 15.92 | 5,000,000 | 16.08 | 5,000,000 | 15.92 |
| 10,000,000 | 16.46 | 10,000,000 | 16.54 | 10,000,000 | 16.46 |
*Maximum headline Corporate tax rate is 17% l **For the First Three(3) Years of Assessment
Comparison Singapore V/S Hong Kong
|
Particulars
|
Singapore |
Hong Kong |
| Language | English is quite commonly spoken in Singapore as it is primary language of communication. | In Hong Kong (especially in recent years), communicating in English in everyday life is getting more difficult. If you try to communicate in English at supermarkets, restaurants you will most often experience difficulties. What that means for your business finding right talent with right English speaking skills is going to be difficult in Hong Kong. |
| Geographical Reach | Singapore in comparison is situated right at the heart of south east Asia. In a way it is equidistant from India, China and Australia (Three Major economies of the region). It is also quite near to few high population countries like India, China, Bangladesh, and Indonesia. So if your business involves taking benefit of all round development happening in Asia zone Singapore might be the better choice. | Hong Kong is located very near to China and it is right next to Guangzhou which is one of the major industrial zone in China. So if your business involves buying or selling products which are manufactured in China then Hong Kong may be a better choice. |
| Relocation | Singapore is literally the curry pot of various cultures where hundreds of nationalities co –exist. You find restaurants, places of interest for people of all nationalities and cultures. Hong Kong in comparison is significantly dominated by Chinese culture. | As the business grows most of the companies plan to relocate some key staff from the home country. Preferences of these employees might matter in that case. In general we have seen more people interested in relocating to Singapore as compared to Hong Kong. |
| Summary | In case your business is targeting all round business development in Asia region then Singapore is the right choice. | It can be said that in case your business is dominated by buying, selling or manufacturing in China then Hong Kong may be the better choice. |
Comparison of Singapore V/S Dubai
|
Particulars
|
Singapore |
Dubai |
| Economic base | Singapore economy in comparison has much broader base. Trade, manufacturing, shipping, banking and finance are at the core of Singapore economy. Because of its broad base, Singapore was minimally impacted in the downturn of 2009. | Dubai is primarily oil, tourism and retail based economy. It’s main focus is on the oil business in the around region. In recent years Dubai government has made efforts to diversify the economy into other segments like trade, tourism and retail. Because of its heavy reliance on oil, its susceptible to volatile situations happening in the international oil market. In the downturn of 2009, the property market in Dubai crashed and many businesses were significantly impacted. |
| Tax rates | Singapore has corporate tax rate of 17%. | There is no tax charge on corporate income in Dubai. It appears that Dubai is a clear winner here. However The government of Dubai has other fiscal revenues through various fees it levies, including road tolls, airport tax, hotel tax, house rent tax, visa fees and various license fees. So the cost of all this needs to be taken into consideration. In fact experienced economist suggests that a modern and transparent tax regime is what Dubai need to move to. |
| Foreign ownership in companies | Singapore allows 100% foreign ownership in the companies registered here. There is no need to get a local partner to act as a shareholder. This way you are 100% owner of your venture in Singapore. | In Dubai, a foreigner can hold maximum 49% shares in the companies established outside the Free Trade Zone. Rest 51% shareholding must be with a UAE national. In case of a flourishing business this can be a problem as the controlling stake is with somebody you don’t really know.
Companies registered in Dubai free trade zone are allowed to have 100% foreign shareholding, but this option has many restrictions. |
| Bureaucracy | Official language in Singapore is English. It has clean and transparent procedures and over last few year all business and government activities have moved online. For the incorporation, business licenses, Visa, banking transaction etc we don’t need to get out of our office. All these things can be done by a professional firm by using an online government platform. This has contributed significantly in reducing the bureaucracy. | Official language of Dubai is Arabic, and Dubai has still some journey to cover so far as bureaucracy is concerned. Much business related activities still require personal visits and may take a long time to process. |
| Residency & Citizenship | Singapore government is very pragmatic and welcomes talented individuals to settle in Singapore. After working in Singapore for 3-4 years you can apply for permanent residency, which gives you almost all the rights a citizen can do (with some exceptions). After around 3-4 years on permanent residency you can apply for citizenship. In 2011, 25000 people got permanent residency and 16000 people became citizen. | There is no such residency or citizenship in Dubai. Citizenship can be obtained only by birth. The popularly called residency visa in Dubai is actually not a permanent residency, but it’s just a visa issued for 3 years either for housing, investment or employment purpose. |
Procedure to Incorporate a Company in Singapore
Step:- 1
Before commencing the incorporation process, make sure that you meet all the requirements, and have all the necessary documentations and information prepared.
- Name of the Company:- Obtain Approval for name reservation application.
- Object/ Activities of the Company:- Obtain Approval from the relevant government bodies, if required.
- Minimum Paid-Up Share Capital:- Minimum Paid-Up Share Capital is S$1.
- At Least 1 Shareholder (Individual/ Company):- Shareholder’s Full Name, Address, Identification Number or Identity Card/ Company Registration Number.
- At Least 1 Resident Director:- Director’s Full Name, Address, Identification Number or Identity Card/ Company Registration Number.
- Singapore Registered Office Address:- Must be a physical office address located in Singapore; a P.O. Box address is not allowed.
Step:- 2
Obtain Approval from a Governing Authority:- If you plan to open a Company in an industry that is scrutinized by governing bodies due to the nature of services that you provide, it may be necessary to obtain approval or referral from a governing authority of Singapore before you can proceed with Incorporation.
|
GOVERNMENT BODY
|
WHEN IT MAY BE REQUIRED* |
| Board of Architects Singapore | The use of word “Architect” in a name or business designation. |
| Council of Estate Agencies | If Principal Business Activities involving “Real Estate Agent” or “Real Estate Agency” |
| International Enterprise Singapore | Names and Activities involving “Physical Rubber”, “Commodity Future”, etc. |
| Ministry of Defence | Proposed names containing “Military” or “Defence” |
| Ministry of Education | Establishments functioning as and providing activities of an academic nature. |
| Ministry of Foreign Affairs | Proposed Names Containing ASEAN. |
| Monetary Authority of Singapore | Proposed names containing “Bank” and its derivatives, “Finance Company” and “Finance”, “Futures Exchange”, “Securities Exchange”, etc. |
| Majlis Ugama Islam of Singapore | Proposed names and activities containing or involving “Islam”, “Muslim”, “Halal” and their derivatives. |
| Singapore Police Force | Activities relating to arms, explosives, ammunition. |
| Singapore Tourism Board | Usage of the Merlion symbol or name; Entities wishing to carry out the business of a travel agent. |
| The Law Society of Singapore | Names and Activities containing or involving “Law”, “Law Corporation”, “LLC”, “Legal”, “Lawyer(s)”, “Advocate(s)”, “Solicitor(s)” |
| Institute of Singapore Chartered Accountants | Names and Activities containing “Accountancy”, “Accounting”, “Audit”, or derivatives thereof |
| Registry of Co-operative Societies | Names and Activities containing “Co-op” or “Co-Operative”. |
| Ministry of Health | Names and Activities containing “Hospital”, “Medical Clinic/Centre”, “Dental Clinic/Centre”, “Surgery”, “Medical/Clinical Laboratory”, “Healthcare Establishment” or any other term or name that implies similarity to these terms. |
| *Please note that this is at the discretion of the “Accountancy and Corporate Regulatory Authority (ACRA)” as well as the relevant government body. For the avoidance of doubt, companies should undertake the responsibility of checking with relevant government body. | |
Step:- 3
Obtain Business Licence (If needed):- For certain types of business activities, it may be necessary to apply for a Business. For Example:-
- Retail Stores
- Constructions
- Import/Export
- Hotels/ Spas
- Medical Clinics & Related Services
- Financial Advisory & Related Services
- Private School & Education Services
- Employment Agency
- Travel Agency
- Real Estate Agency etc.
Step:- 4
Apply for Employment Pass (EP):- An Individual who intends to relocate to Singapore to run his/her Company must obtain an Employment Pass. Likewise, any corporations intending to relocate their staff are required to apply for an Employment Pass for them.
Eligibility Criteria:–
- Relevant Skills
- Educational Qualification
- Professional Background
- Right Designation
- Right Experiences
- Right Salary
- Nationality
- Company Structure
- Niche Industry
Step:- 5
Post Incorporation (Completing the Start-up Process):- To Complete the start-up process, all Companies should pay attention to these “follow-up” steps, which are just as essential. Post incorporation matters that you should consider are:-
- Opening of a Singapore Corporate Bank Account
- Determining the Company’s Financial Year end
- Appointment of Auditors (within 3 months of incorporation, unless deemed exempt)
- Holding of Annual General Meeting & Filling of Annual Returns (within 18 months of Incorporation)
- GST Registration, if applicable (Current Rate of GST is 7%, Registration for GST is compulsory when the turnover is more than S$1 million for the past 12 months; or currently making sales and you can reasonably expect the turnover of your business to be more than S$1 million for the next 12 months.)
- Central Provident Fund Board (CPF) Registration, if Applicable
Disclaimers
This article is prepared on the basis of our experience of incorporation of the Company in Singapore as well as some slides received from our Singapore consultant and also used search engines. All given details may be change from time to time due to change in the government policy of the Singapore. Always obtain third party opinion before rely on any professional advice.
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PCS Bhavesh Kumar Rawal
Surat, India
